Machina Research has issued its annual assessment of the global opportunity for M2M. The latest study finds that M2M connections will grow from two billion in 2011 to 18 billion in 2022, of which 2.6 billion will be wireless wide area network connections. Total market revenue will exceed USD1 trillion but the opportunity depends on your role in the value chain.
Machina Research, the world’s leading advisors on M2M today published its most recent report, M2M Global Forecast & Analysis 2011-22. It provides a comprehensive and detailed analysis of the
global opportunity for machine-to-machine communications. The key findings are:
- Global M2M¹ connections will increase from two billion at the end of 2011 to 18 billion at the end of 2022. Connections will be dominated by two sectors: consumer electronics (including cameras, music players and TVs) and intelligent buildings (e.g. security and HVAC systems). Between them they will account for almost 70% of the total.
- Short range technology will dominate: 73% of M2M devices will be connected by shortrange technologies, mostly WiFi. Cellular/wireless wide area network (WWAN) connections will grow from 146 million at the end of 2011 to 2.6 billion in 2022. The most important WWAN sector is Automotive (including pay-as-you-drive insurance, emergency/eCall and security and tracking), accounting for 60% of connections. At the end of 2011 M2M accounted for 2% of cellular connections. By 2020 this will reach 22%.
- By 2022 Europe and Developing Asia-Pacific will be tied as the biggest region for M2M, each accounting for 27% of connections. The biggest single markets will be the China and the US with 20% and 19% respectively.
- In terms of revenue², M2M will grow from USD200 million in 2011 to USD1.2 trillion in 2022, a CAGR of 18%. Two-thirds of the revenue opportunity is accounted for by devices and installation, and one-third by M2M services.
- Machina Research estimates that 90% of the USD400 billion M2M service revenue is accounted for by the ‘service wrap’ and 10% by the provision of connectivity. Of the USD39 billion connectivity service revenue, the majority comes from service enablement (USD29 billion) with just USD9 billion coming from the provision of basic cellular connectivity.
Commenting on the findings, report co-author Matt Hatton notes:
“M2M, in all its diversity, is little short of a second industrial revolution. The growth in connected devices over the next few years will fundamentally change the way we live and work. The potential to save money, generate new revenue streams and create sustainable cities will drive businesses, governments and individuals to embrace M2M. The potential impact is huge. Realising this potential will create a massive opportunity for telcos, service providers, device vendors and many others.”
Meanwhile report co-author Jim Morrish warns that the opportunity for mobile operators will depend heavily on what role they play:
“Of the USD400 billion M2M services revenue, just USD9 billion will come from the provision of basic cellular connectivity. There are much richer rewards available to mobile operators who can expand their offering beyond the provision of connectivity. This MNO pursuit of the full service revenue will be a defining characteristic of M2M in the next 3-5 years.”¹ Machina Research defines M2M as “Connections to remote sensing, monitoring and actuating devices, together with associated aggregation devices”. It includes all forms of short range and wide area technologies. It excludes personal mobile broadband devices in the form of mobile handsets, PC/laptop connections and tablets/eReaders. Note that we have included in-building network infrastructure within our definition of M2M for this 2012 version of our Global M2M report. As such, devices such as residential modems/ routers are included this year whereas previously they have not been.
² Revenue includes device cost where connectivity is integral to the device, module costs where devices can optionally have connectivity enabled, installation and integration costs, monthly subscriptions, connectivity and traffic fees.
About the Report
Machina Research is a UK-based telecoms research and consulting firm focusing principally on the emerging opportunity associated with new forms of connected wireless device, specifically machineto-machine (M2M) and mobile broadband. The report M2M Global Forecast & Analysis 2011-22 is based on data extracted from Machina Research’s Forecast Database which tracks and forecasts 61 M2M application groups across thirteen sectors (see chart below) based on analysis of hundreds of individual applications. The comprehensive database comprises more than one million datapoints and includes ten year forecasts (2011-20) for each application group across 54 countries and six regions. For each application group and country it provides information on numbers of connections, technology type, revenue and traffic.